TelexFREE class action suit goes federal

Saturday

Jun 28, 2014 at 6:00 AM

By Scott O'ConnellDaily News Staff

FRAMINGHAM – A local lawyer’s class action lawsuit against the alleged architects of TelexFREE has jumped from the state to federal courts, and is primed for a quick judgment, he believes.Evans J. Carter, whose law offices are at 860 Worcester Road, originally filed the suit in Middlesex Superior Court in April on behalf of a Worcester man. The court recently moved the complaint to the ongoing federal case against the Marlborough company, he said.Rather than try to bring the lawsuit back to Massachusetts, Carter said he conferred with the government trustee managing TelexFREE’s bankruptcy proceedings and eventually decided to pursue his class action in U.S. District Court.Carter’s ultimate goal is to chase down the company’s alleged masterminds who fled to Brazil."We want to get (class action) certification and a judgment quickly," he said. "Then we’ll grind it out in Brazil."TelexFREE, which ran its U.S. operations out of an office building in Marlborough, allegedly raised $300 million over the past two years through what government prosecutors say was an unusually large international pyramid scheme. If Carter’s lawsuit does get class action certification, his case would be representing an estimated 100,000 victims, many of whom reported losing tens of thousands of dollars.In moving to the federal arena, Carter amended his complaint to include the latest state and federal securities law violation charges against TelexFREE, as well as the Justice Department's criminal cases against the company's two co-owners, James Merrill of Ashland and Carlos Wanzeler of Northborough. As a consequence, Carter's lawsuit now includes Homeland Security's affidavit on the government's investigation - an important tool in the case, he said."I think the criminal action makes our case a lot stronger," he said.It is more costly to pursue a class action complaint in federal court, he said. His lawsuit also joins several other national class action cases against TelexFREE filed in both federal bankruptcy court and U.S. District Court in the past two months.But because Carter filed his suit before those, he believes his case will be first in line in federal court, he said.Carter said he hopes to secure a "very large figure" in an eventual judgment. But like in many class action cases, how much of that amount he'll be able to recover is uncertain.Carter's lawsuit names 11 defendants, including Carlos Roberto Costa, one of the alleged founders of TelexFREE who was not included as a defendant in the Securities and Exchange Commission's case against the company. While the government is not usually intent on chasing foreign nationals - Costa is living in Espirito Santo in Brazil, the lawsuit claims - Carter said he is willing to do so."I have no objection to going after foreign nationals, and going into their countries after them," he said.Wanzeler, who fled the U.S. in April, is also believed to be in Brazil, according to authorities.Scott O'Connell can be reached at 508-626-4449 or soconnell@wickedlocal.com. Follow him on Twitter: @ScottOConnellMW